Wash-sale rule and the active trader

Discussion in 'Professional Trading' started by viewpoint, Dec 3, 2002.

  1. This issue never became serious for me until this year ...

    You know about the wash-sale rule where if you buy or sell the same securities within 30 days-before or after-of the current transaction, you cannot immediately recognize ...blah, blah, blah ...

    It seems to me that if you trade same stocks throughout the year, the Schedule D could become complex because you keep pushing gains and losses to next transaction, which is then pushed into the next, and the next ....

    Am I right, roughly, or am I imagining something? Anyway, long ago, I read on a traders' tax site, that I could simply avoid the complication by skipping the whole December, this way, there is no transaction for 30 days and I can fill out the Schedule D, simply listing gains and losses for each transaction, and summing up at the bottom.

    But I don't want to skip the whole December, I'm not in position to do so. Even if the tax return might look a bit complicated, I will go through the calculation if need be, I only did about 100 round trips this year.

    Again, am I imagining a problem? I'm sure many here were/are active daytraders at some point, trading the same securities throughout the year. Was the Schedule D a nightmare for you, or fairly simple?

    P.S.: I forgot the name of that traders' tax site. Maybe someone else knows about it, please give the URL if you know, thank you.
  2. gains arent subject to wash sale.only losses.

  3. qdz


    please comment and help.

    My questions are
    1. is it okay after closing all positions and skiping January next year?
    2. can I claim trader status for part of the year?
    3. Is there a possibility that Uncle Sam prohits me to claim all short term loss agaist gain even they are traded in pairs like spreads?

  4. 8hcap


    The real pain is in taking the loss from a wash and then adding that loss to the cost basis of the next trade. When it gets to schedule D, the work will have been done in getting the cost basis straight.

    I did find this link you might find helpful, talks about wash sales only coming into play if carried between two calendar years. According to this, you will need to stay out of the stock for January.

  5. trader3


    How do wash sale rules apply if you are always flat at the end of the day but trade the same few stocks every day?
  6. trader3


    Just wondering how wash sale rules apply to a daytrader who is flat at the end of every day and qualifies for trader status but has not elected MTM accounting.

    Let's say, to make the example even more clear:

    1) same 10 stocks traded all year
    2) flat at the end of every day
    3) no trading the last trading day of the year
    4) no trading the first trading day of the next year

  7. 8hcap


    Check the link I posted...

    My take -

    - Being flat at end of day means nothing. If you have a loss and buy the stock back within 30 days, you have a wash sale if you are not MTM.

    - In order to avoid the wash calculations, stop trading the stock that has a wash 31 days before end of year, and 31 days after the start of the new year.

    As I understand it, technically the IRS would still like the wash calculations made in the above scenario, however the math will 'wash' so any audit will result in no changes - therfore not typically pursued by the IRS.
  8. syd697


    Do wash sales apply to options trading? Specifically QQQ options.
  9. The article mentioned seems to say that you just need to stay out all of December or the January of the following year; are you suggesting that I must stay out both December and January?
  10. to trade the eminis!! NO WASH SALES!! :D

    As well only 40%/60% short/long term cap gains. :D
    #10     Dec 12, 2002